The Glue

What’s Cool About Scorecards?

Today I was reminded what the coolest thing is about Balanced Scorecards: THE CONVERSATION

 

The point of a scorecard is to force "the conversation" about the most important “red” measures (those not hitting targets). Sure there are other benefits of scorecards, like communication of strategy and transparency, but for me I’m most excited to see my client have an honest conversation about what they can do to turn “reds” to “greens.” The real reason to develop a scorecard, after all, is that it's not just a report. Reports don’t relieve stress in the organization. The conversation that occurs during a Scorecard Business Review does.

As many of you can appreciate, there are no guarantees that you’ll get to the conversation.

But after the strategic planning, the scorecard cascading, the cultural resistance to “more work,” the gathering of the data, the setting of targets…today we made it!

 

I felt truly happy to listen to a cross-functional conversation about a “red” measure in the purchasing area. At the beginning you could feel the tension in the room.  This measure symbolized the stress behind the process.  But the conversation forced the participants to truly understand the current process and to brainstorm how they could improve it.  Once that happened, the scorecard participants could see the light at the end of the tunnel.  This will be a "green" measure soon.  Their lives will be so much less hectic next year. They finally saw the value that the CEO promised would be there.

 

That's cool.

Webinar this Thursday -- "Government 2.0: Increase Transparency and Accountability with StimulusScorecard"

Join us this Thursday, June 25th at 2pm EDT for a free webinar on Government 2.0 and StimulusScorecard.

‘Government 2.0' involves using web tools to increase transparency and thus improve the effectiveness and openness of government. In this webinar, we’ll discuss a tool called ActiveStrategy StimulusScorecard, which enables governments to leverage the web to aid in strategic planning, performance management, and Stimulus reporting.

The first round of ARRA (Stimulus) reports are due October 10th, and require that a “full picture” of the projects be presented so that taxpayers have the ability to track and monitor how the funds are being spent. During the webinar, we’ll review the latest reporting requirements released by OMB and discuss why waiting to set up your reporting system until the full extent of requirements are published in August might create problems. StimulusScorecard is a Balanced Scorecard-based, centralized collection system for your Stimulus project data that you can use now to ensure that your programs stay on schedule and on budget and to track accountability for every stage of the work. And you can use the data you’ve collected to populate OMB’s reports when the time comes.

During a live demo of the application, we’ll show you example Stimulus project scorecards, as well as how to share your data with the public.

Presentation topics:
• Review of the latest Stimulus reporting requirements
• How a scorecard application makes data available for preemptive action on emerging problems
• How technology can keep critical data part of on-going operational decision making
• How StimulusScorecard can facilitate clear communication with the public on who is benefiting from projects and who is responsible for keeping project commitments
• Review of example Stimulus Project Scorecards

To register: https://www1.gotomeeting.com/register/978908841

Four Things You Should Know About Your Scorecard Measures

Measures trigger work. You're either creating measures, gathering data for them, reviewing them, or trying to improve them. That work will often be resisted due to confusion and credibility concerns. I coach my clients to know 4 things about every measure they have:

1. Where does the data come from? This is the most common challenge leaders throw at measures. "I don't trust the source, so I don't need to act." You need to know what department pulls the data, if they transform it in some way, who quality checks the data, and who loads it into your scorecard. 

2. What is excluded from the data? Too often, leaders look at measures for months without really understanding what the numbers mean. Specifically, they don't really know what's included and excluded from the numbers. It's important to know those nuances before you spend time and money on improving the numbers.

3. Why did we set the target? Typically, those who are responsible for acting on measures weren't in the meeting when the target was set. Many times, there's even confusion within the team that set the target. I ask my clients to find out who set the target and what the rationale was for setting it.

4. What accumulation do we care about? Knowing the answer to this subtle question will help you clear up a lot of confusion. Each time the scorecard team meets to discuss the measure, is it more important to talk about performance YTD, performance just this period, or the performance as a snapshot in time?

Let me know if you consider other questions that I didn't mention.

Two Quick Tips to Keep Your Scorecards Alive

Tip #1: Put all scorecard reviews for the year on the calendar now.

I’ve said it many times in the past, but it’s worth repeating. It’s not what gets measured that gets done. It’s what gets reviewed that gets done. Events drive behavior. If measure owners and your data entry people don’t see a date set in stone when managers will meet and review the scorecard, they won’t update the data action items. There are so many other demands on their time that if they can let this one slip, they will.

Tip #2: Always repeat the same agenda.

There are a few agenda topics that are critical to keeping the strategy alive, even late in the year. Too often, these agenda points drop off after the first month because scorecard teams are busy fighting fires and reacting to their daily work. I recommend that every scorecard review contain the exact same topics throughout the year. If some topics need more time, fine, but the scorecard review must touch on all the topics.

Here are some of those topics I see commonly discarded later in the year:

• State the strategy.

• Has the strategy changed?

• How do we measure the strategy?

• Are the targets still valid?

• Who is responsible for meeting the targets?

• What are the most important measures now?

Go forth and review!

Musings on Measurement and the Quality of Working Life

Last week, I had the pleasure of addressing an assembly of Florida local government performance management professionals. Yes, I was preaching to the choir, but they carry the message of the benefits of measurement back to their governments. I encouraged them to use sports analogies to explain the message. Pro teams track their win/loss records (and revenues) on their top level "scorecards," and the offense has a "linked" scorecard, as does the defense. Each player has "Personal Goals," such as completed passes, yards gained, etc. Players do not feel imposed on by measurement but understand that it is an essential tool for individual improvement and sustained high performance by the team. Moving to another sport, Michael Phelps does not get upset when his coach uses a stopwatch to measure his performance and he is used to knowing times for individual laps so he can assess his performance in segments from the time he leaves the blocks to the millisecond he touches the wall to finish.

This approach to discussing performance measurement often resonates for the athletes, former athletes and us fans. However, there still is a lingering fear of measurement. The fear is not irrational; the misuse of measurable goals goes back a long way in American business culture. Dr. Deming himself would rail on about arbitrary targets that were unreachable because of the limits of process capabilities. Regardless, they are used to "push" people, but in fact demoralize them. People rally around a reachable "stretch" goal, but lay down and push paper when the impossible is asked. If you ask me to do a six minute mile, I laugh or cry; I don't try. Ask me to walk a mile a day for my health, and we have a real conversation and I am motivated.

Which brings me to something new I have learned about measurement. It literally can be good for our mental and physical health. I recently heard a commencement speech by the Dean of the Education Department at the University of Miami. He stated that there is considerable research suggesting that people who have control over their work lives (are empowered) live longer and use the health system less. Empowered employees are employees with measurable personal and project goals and have great discretion in the approach to achieving goals and meeting specifications. Effective empowerment cannot be accomplished without performance measurement. This observation should help performance management professionals appreciate the importance of their work, not only for organizational excellence but also personal well being.

Dean Prilleltensky had another message for the graduates. Important human advances are made by changing systems/processes. We need to help individual managers use measurement to develop their organization and employees. More importantly, we need to affect how measurement and managment are taught and modeled by leadership.Maybe electing former pro athletes to Congress is not such a bad idea after all.

Do you have the right MAP?

Yes - summertime is here. Do you remember “back in the day” when your family would go on a vacation? My dad was a huge AAA fan, and for our family road trip vacations, we always had the AAA “TripTik.” It was a customized paper map that highlighted the route, the towns along the way with mileage estimates in between, etc. For you younger folks, no, we didn’t always have GPS devices in the car.

Given your company’s current path and journey, what “map” are you following? Is your map determined by the daily headlines? Is it determined by fluctuations on Wall Street, or by a reactive leadership team?

To reach your goals, whether they’re at a personal or company level, you need to know how you are measuring success, and what action items need to be initiated to change performance. How are you going to change processes or a given set of behaviors?

I like to think of three basic components to setting goals and achieving results. Call it designing your own personal “TripTik” or your MAP: Measure, Action, Performance.

For your given scope of work, day in and day out, what should be on your MAP? The first step is to determine what you are going to Measure. What are the top 3-5 measures that you should examine and track that will provide you with the best indication of how your journey is progressing? If you are a leader at the top of the organization, you’ll be following some “lagging” or broad scope measures like margin or turnover rates. However, you’ll want to dive deeper and identify some leading, or causal measures as well. Ask yourself, what few measures provide us with the best indication of future performance? If you’re in healthcare, maybe it’s your imaging volumes, cardiac procedure revenues, and use of contract labor that provide the best indication of your end of the month or quarterly margin.

Maybe you’ve heard the statement “vision without strategy is called a dream.” Well, measures without action items are just numbers. They do no good if they don’t lead to Action. You now have the top 3-5 measures for your department or your project; each of them should have an initiative or project aligned with them. Something will bring about a change and lead to results.

Once your initiatives are in place, once you’ve applied a strong lever arm to that measure you want to move, you need to monitor and manage the Performance. Did it improve for one month, then fall back to the previous performance level? How are you going to track and keep that measure in control? Consistent reporting with the expectation that the measures will be reviewed and discussed are key components to accountability within your teams (and maybe even for yourself).

Chances are, you’re probably not loading up the minivan to drive aimlessly across the country this summer. (If you are, please call - I want to go.) In today’s economy, you don’t have all kinds of time to reach your destination, so you better have a good MAP.

Miami-Dade Park and Recreation Receives Florida Sterling Award for Organizational Excellence

Rumor has it that deployment interviews conducted by the Sterling Examiner team at the Miami Metro Zoo were what locked in high scores for the Park and Recreation Department. J.J. the gorilla knew the department's vision of "a seamless, sustainable system of great parks, public spaces, natural areas, cultural areas, greenways, water trails and streets." And most of the parrots could recite the "top level" measures for the department with ease.

All attempts at humor aside, congratulations to Mayor Alvarez, County Manager George M. Burgess, and Department Director Jack Kardys on the Miami-Dade County Park and Recreation Department becoming the first such department in the state to receive the prestigious Sterling Award for organizational excellence.

A few of you out there may not know how the State Baldrige-based awards work. Here's a summary:

• The Governor’s Sterling Award process is comprehensive and rigorous, and is the highest award an organization can receive for performance excellence in Florida. 
• Organizations submit a 50-page application that is scored against the seven categories of the Sterling Criteria: Leadership; Strategic Planning; Customer and Market Focus; Measurement, Analysis, and Knowledge Management; Workforce Focus; Process Management; and Results. 
• The Sterling Criteria (like most of the state programs) are based on the Malcolm Baldrige Criteria, which are nationally recognized as the world-class standard for organizational excellence.
•  Expertly trained Sterling examiners independently review the application, and then conduct a substantial five to six day site-visit.
• The examiner team interviews employees at all levels of the organization and analyzes every aspect of the organization and its performance. 
• Next, the examiner team prepares a detailed feedback report highlighting key strengths and opportunities for improvement.
• The Sterling Panel of Judges then selects organizations that have successfully implemented the Sterling Criteria and should be considered role-model organizations.  

It's an impressive process and Miami-Dade residents are impressed, too. All 2.5 million of them have access to 258 properties maintained by the County Park and Recreation Department. The system includes the world famous Miami Metro Zoo (rated one of the top ten zoos), the 444 acre Deering Estate, and signature events such as the upcoming Annual Blue Water Classic fishing tournament.

Residents know their parks are special, but it was the Miami-Dade County Parks and Open Space System Master Plan that blew the Sterling examiners away. This Department not only has a vision, they have a plan, plus a well-developed process to execute it and a proven track record of doing so successfully.

The Miami Dade Parks and Recreation recognition by the Florida Sterling Council gave everyone here at ActiveStrategy quite a bit of satisfaction, too. We've been working with them for over five years and we knew they were great all along (and have the measures to prove it). 

You can read more about the 2009 Governor’s Sterling Award Recipients at www.floridasterling.com.

Meeting IOM’s Six Aims - The Role of Accountability and Scorecards

The Institute of Medicine’s (IOM) Six Aims for Improvement state that healthcare delivery should be Safe, Timely, Effective, Equitable, Efficient, and Patient-Centered. In addition, The American Hospital Association (AHA) has a new and permanent activity called “Hospitals in Pursuit of Excellence.” This portfolio of resources is available to help hospital leaders, clinicians, and staff accelerate the transformation of care and processes to the IOM Six Aims for Improvement (www.ahaqualitycenter.org).

As you read through the summary of the Six Aims and core principles of the AHA’s Hospitals in Pursuit of Excellence (HPOE) program, there are several themes that come through very strongly. From a leadership standpoint, the need for measurement is essential. Not only do you need to know your baselines, but you also have to know the benchmarks, establish goals -- and more importantly -- decide upon and implement the initiatives which are going to move the meter on the prioritized, leading measures. 

Three of the core principles of HPOE describe the reduction of variability, removal of process variation, and the removal of inefficiency. Managing these endeavors requires organizing a portfolio of projects and initiatives. Of course, all that may actually be the “easy” part. The biggest challenge for many organizations is building the culture that supports and accelerates a pursuit of excellence. One of my favorite lines regarding culture is that “culture eats strategy for lunch every day.” Not making individual accountability a central theme of any large scale initiative only sets you up to get your lunch eaten by that cultural challenge.

So how can you go about providing a framework to build, manage, monitor and drive successful change? One way is to use Balanced Scorecards. Scorecards and tools that facilitate and promote accountability not only can help provide strong building blocks for cultural shifts, but they can also lead to organizational accountability. My colleague, Jeff Bunting, has written about this in an earlier blog:

“Ensuring that leaders and employees are accountable for business results is not primarily a technology issue. However, both the Strategy Execution methodology and related software must be designed to help nurture and facilitate personal and organizational accountability for real change to occur.”  (The Glue: Blog, 08/25/09  Jeff Bunting).   

Scorecard software that is effective in facilitating a higher level of accountability will include initiatives (with tasks and milestones) with assigned owners. Providing a status report on predetermined dates, and having the review of the initiatives “real time” in a business setting set the stage for communicating expectations. The questions, dialogue, and action items that come from these exchanges bring true value to the organization. 

How are you organizing your efforts for the IOM Six Aims or the HPOE programs? Does your approach facilitate accountability and present an audit trail of status reports, milestones, and level of achievement? Let me know what you see as a “recommended practice” for these pursuits.

Healthcare Stimulus Funds and Scorecards

The American Recovery and Reinvestment Act of 2009 (ARRA), signed by President Obama on February 17, 2009, includes $19.2 billion in provisions for healthcare information technology (HCIT). As part of this program, there are incentives through Medicare and Medicaid for the “Meaningful Use” of Certified EHR Technology.

So just what does “meaningful use” mean for hospitals? Medicare defines it so far as “using certified EHR technology and, to the satisfaction of the Secretary of HHS, demonstrating that the certified EHR technology is connected in a manner that provides for the e-exchange of health information to improve the quality of health care, such as care coordination; and, the hospital submits information, in a manner and form specified by the Secretary, on such clinical quality measures and such other measures as selected by the Secretary.”

Assuring appropriate use of ARRA funds will be a key priority for many hospitals. To that end, utilizing a scorecard methodology and product can provide the necessary tools to track, monitor, manage, and document the meaningful use of ARRA projects and programs. The Secretary of HHS will determine the measures that will be required and these measures will need to be tracked over time and submitted as “proof” for quality of care improvement requirements for incentive payments.

An effective scorecard should provide the following capabilities for hospitals and healthcare systems:

• One centralized repository of key cost, schedule, outcome, and status measures for each project with intuitive scorecard and stoplight views -- this provides healthcare clients with unprecedented capabilities to document meaningful use of ARRA funds.
• Accountability at the project/program level -- each project has an accountable person responsible for monitoring and reporting project/program progress and status. This ensures that there is personal accountability for individual projects/programs.
• Built-in audit trail -- ongoing status reports and project/program measures are maintained so it is clear what accountable parties were reporting and what issues were raised over the life of the project/program. This helps avoid unnecessary delays and removes numerous barriers.
• Tracking of leading and lagging outcome measures -- the tools and the approach enable the definition of outcome measures for each project or program and track the outcomes over the life of the project. If outcomes are not reaching the targeted goal, corrective action can be taken early in the life of the project or program. This helps ensure that the ARRA funds deliver the outcomes expected.

Hospitals will need a strong closed-loop management process to assure that ARRA funds are tracked accurately and appropriately with the right amount of transparency. Furthermore, the accountability and review process that scorecards can provide will help to diminish the chances of unwanted project and initiative delays and helps to drive a hospital’s ability to provide the outcomes envisioned by the Federal Government.

The Healthcare Information and Management Systems Society (HIMSS) has some great resources and summaries on their website regarding the ARRA and its impact on HCIT. The first link provides an overview, while the second link has valuable FAQs.

1. http://www.himss.org/content/files/HIMSSSummaryOfARRA.pdf
2. http://www.himss.org/EconomicStimulus/docs/HIMSS_FAQs_ARRA.pdf

Strategy Execution vs. Performance Management: What You Need Software To Do (Part 9: A Platform for Results)

Time for another installment in my long series on this topic. For those of you who haven't been following this thread, here's a quick recap. In my first post Strategy Execution vs. Performance Management, I explained my basic premise that there are major differences between Strategy Execution software and the broader category of Performance Management software and why I believe that only Strategy Execution software really helps an organization become more performance-focused. I've since talked about accountability (Part 2), driving action (Part 3), performance improvement (Part 4), communication (part 5), data (part 6), who should manage this software in your organization (part 7), and distributed management (part 8). Today, it's all about what features in Strategy Execution software will help you achieve results.

So far in this series, I’ve been arguing that technology is needed to support true Strategy Execution.  More specifically, software that clearly captures the objectives of the organization and cascades them down through multiple levels, helping you ensure that everything is aligned to achieve the results you want.  

Once an organization masters these simple, profound concepts (that are ironically difficult to practice), they end up wanting more. Lots more. Here are some things I’ve seen organizations want as they become more advanced:

• Support for six sigma methodologies. Control charts, control limit calculation, out of control condition alerting and stoplighting, graphical navigation of connected control charts.
• Strong support for linking personal goals to the organizational strategy. Support for not just business reviews, but also personal reviews. The ability to “cascade” some of a manager's goals to her direct reports. The ability to have common department or company goals. Easy linkage with a compensation system.
• Process Management and Improvement. Once an organization has tackled the top-down strategy approach, they find gaps in cross functional areas. Select a system that can manage processes as well. Support for process hierarchies, process maps, and the ability to link measures and initiatives to the process are all important here.
• The ability to benchmark against internal and external best practices examples.
• The ability to support communities of practice or special interest groups to share best practices.   

Our next post will wrap up this topic with some predictions of where this whole Performance Management / Strategy Execution area will head over the next few years. 

I’d love to hear your comments on this topic or any questions you may have about using software to drive your Strategy Execution efforts.